Turkish monthly inflation climbs to 3.9% after post-election lira drop

Turkish monthly inflation climbed to 3.92% in June, its highest level since January, after a plunge in the lira currency following the re-election of President Tayyip Erdogan, official data showed on Wednesday.

Annual inflation dipped to 38.21% in June, from 39.59% the previous month, due in part to base effects, though price pressures are expected to build again through the summer.

The monthly figure was still below a median of estimates in a Reuters poll, which predicted inflation would reach 4.84% month-on-month. The poll had forecast that annual consumer price inflation (CPI) (TRCPIY=ECI) would be 39.47%, and was expected to end the year at 51.5%.

Inflation surged after a late-2021 currency crisis that was sparked by rate cuts that Erdogan had called for, based on his view that interest rates cause inflation. Annual inflation touched a 24-year peak of 85.51% in October before easing.

The lira has lost some 30% of its value so far this year – and more than 20% in June alone.

Erdogan won re-election in late May and has since signalled a U-turn towards more orthodox economic policies including rate hikes. Last month the central bank hiked its key rate by 650 basis points to 15% and called it the “first step” to curb inflation.

This report’s information was first seen on REUTERS; to read more, click this link.